Wheat Popping Higher into Friday

Wheat futures experienced declines on Thursday, primarily due to a significantly weaker-than-expected USDA export sales report, which showed only 255,208 MT sold, well below analyst estimates. This demand weakness contrasts with upward revisions in global supply forecasts; IKAR now estimates Russia's wheat crop at 84.53 MMT, and the European Commission raised EU 2025/26 production to 128.2 MMT. The International Grains Council also increased world production to 808 MMT and ending stocks to 264 MMT, indicating a robust supply outlook despite the market trading with gains on Friday morning.

Analysis

The fundamental outlook for wheat has turned more bearish, driven by a confluence of weak U.S. export demand and upwardly revised global supply forecasts. U.S. export sales for the week of June 19 were exceptionally weak at 255,208 metric tons (MT), significantly missing analyst estimates of 300,000 to 600,000 MT and marking a 61.75% decline from the same week last year. This poor demand signal overshadowed a single purchase of 82,000 MT by a South Korean mill. Compounding the price pressure, global supply estimates have been increased; IKAR raised Russia's crop forecast to 84.53 MMT, the European Commission lifted its 2025/26 EU production estimate to 128.2 MMT, and the International Grains Council increased its world production and ending stock forecasts to 808 MMT and 264 MMT, respectively. This combination of factors contributed to price declines across all major U.S. wheat futures on Thursday, with Chicago SRW dropping 7 to 8 cents, and suggests that the minor gains seen on Friday morning may be a temporary technical rebound rather than a shift in the underlying supply-demand imbalance.

Key Decisions for Investors

• Given the weak U.S. export data and rising global supply forecasts, investors should consider a cautious or bearish stance on wheat futures, as fundamentals point to continued price pressure.
• Closely monitor upcoming USDA Export Sales reports, as a sustained improvement in U.S. export demand is necessary to counter the bearish supply-side narrative and support a price recovery.
• Treat the Friday morning price gains with skepticism, as they may represent short-term technical buying or short-covering rather than a change in the fundamentally bearish market structure.
• Continue to track crop production estimates from key international bodies like IKAR and the IGC, as further upward revisions to Russian or global stockpiles would likely cap any potential price rallies.